Orig article at PayPal offcourse you gotta take the pain in the rear to find it your self:

https://www.thepaypalblog.com/2010/07/update-on-paypal-accounts-for-india-users/

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Hello Zoe,

Good morning.

I wanted to make sure you aware of a notification that was sent yesterday to customer’s in India. I have included the notification below.

In accordance with regulatory instructions, we would like to notify you about a change in our withdrawal functionality in India starting on August 1, 2010. At present you can request for either an electronic or cheque withdrawal of funds from your PayPal account if you are an India user.

From July 29, 2010 onwards, you will only be able to request for a cheque withdrawal of funds from your PayPal account.

While we are working hard to restore the electronic withdrawal service, in the meantime, we are bringing this matter to your attention so that you can plan your future withdrawal activities accordingly.

To request for a cheque withdrawal:

1. Log into your PayPal account, click on ‘Withdraw’.

2. Click on the ‘Request a cheque from PayPal’ link.

3. Enter the withdrawal amount and select your mailing address, then click ‘Continue’.

4. Click ‘Submit’ to confirm your request.

In order to help you with this change and until further notice, we will refund the $5 USD cheque withdrawal fee to you for cheque withdrawals made on July 29, 2010 onwards.

For any questions, please log into your PayPal account and click ‘Contact Us’ at the bottom of the page.

We apologize for any inconvenience caused from this change in our withdrawal functionality. We will provide ongoing updates to you here. We thank you for your attention and patience as we work tirelessly to resolve this situation as quickly as possible.

Please let me know if you have any questions regarding this change.

Sincerely,

Carolyn Anderson / Merchant Account Manager
direct 866-923-3778 / cell 402.960.9871
fax 303.395.2821
office hours 7:30 AM – 4:00 PM CST Monday – Friday

@Anirudh
Mate looks like you / your firm saw burnt due to this issue. The only issue is there are no better alternatives to Paypal right now, if you consider all the aspects, reliability, usability and how it has leveraged itself until now.

A) Should we trust PayPal in future?
ANS: ABSOLUTELY NO

B) Are they really concerned about our Money?
ANS: ABSOLUTELY NO, After a long period of two weeks we receive an apology letter stating that “We are sorry we goofed up opps!”? and stuff like “Your money just got sacked since this is nothing serious to us we are just doing a drill of playing a game with your hard earned money”?

C) Is RBI responsible for this?
ANS: UNQUESTIONABLY MAYBE, So, Question is why this is happening in India and nowhere else? Question is why we are being kept behind curtains and dark? Question is why Moneybookers and other Payment systems are working but PayPal is not? you just want to exclude the RBI out of this since they are least concerned with us. Everyone failed here! RBI off course you cant expect them to give you a comforting truth so a comforting lie should suffice you! And PayPal Ow man no shit a multinational company failing to inform and notify of an issue of this magnitude. That was an AWESOME combination of pure frustrating, destroying trust & spreading chaos.

D) So what does PayPal tell us now?
ANS: “We are sorry, but your valuable to us so please give us another opportunity to goof up and play some more engaging games with your money” and “We just love to make more profits by giving you a pathetic exchange rate”

D) What now?
ANS: DTA (Don’t Trust Anyone) Get your sleeves up against them and find your own ways to get paid over any other medium that serves better, communicates better and keep them in plenty. If one fails other should work out.

Ive let all my clients know about this issue and advised them (in advance unlike PayPal) to switch over to some other Payment system which is reliable, responsible and does the main thing “ACTION” at PAR. The truth will probably be dead and berried RIP about what happened because the shame and disgust they bring upon themselves is apocalyptic now.